AFRF Newsletter 4-2023-11-27

Retirement

Alexander Forbes Retirement Fund newsletter Issue 4 for 2023

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Alexander Forbes Retirement Fund newsletter

Winding down to the end of the year Fund updates – the latest two-pot developments

Meet Michael Avery – financial podcasts to empower

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Investment returns to

30 September 2023

Fund updates The latest two-pot system developments

The two-pot system

There have been some developments regarding the implementation of the two-pot retirement system.

On 21 November 2023 in Parliament the Standing Committee on Finance rejected National Treasury’s proposal to change the implementation date from 1 March 2024 to 1 March 2025. This means that 1 March 2024 has become the most likely proposed implementation date. Final parliamentary approval and final legislation is still needed as part of the process. However, Alexforbes will treat 1 March 2024 as the proposed effective date.

It’s important to remember that the final legislation has not been issued and parliament must still approve these changes.

This feedback has been discussed and four changes were announced: 1. When does the two-pot system start?

It will start on 1 March 2024.

1

Any new retirement savings will be split into two new pots for your retirement

two-thirds (about 67%) automatically go into your retirement pot retirement pot

savings pot

one-third (about 33%) automatically goes into your savings pot

2

How your two new pots work

You must use your retirement pot to set up a retirement income.

No withdrawals allowed.

retirement pot

savings pot

You can withdraw from your savings pot once a tax year if you need to.

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2. From 1 March 2024, how much can I withdraw from my savings pot?

The most you can withdraw from your savings pot is R30 000, not R25 000, depending on how much you’ve saved A small amount of your savings – 10% – will be moved from your vested pot to your new savings pot on 29 February 2024. This first amount in your savings pot will be your starting balance and can’t be more than R30 000. You’ll be able to withdraw the money in your savings pot if it’s more than R2 000.

What happens to my existing retirement savings?

Today your retirement savings are invested in one pot for your retirement.

You can only withdraw cash from these savings if you leave your employer or retire.

Rules apply. vested pot

3. How will I be taxed?

A tax directive is not needed – the fund administrator will deduct the correct amount of tax You’ll pay tax on any cash you withdraw from your savings pot at the same rate that your salary is taxed. SARS will inform the administrator of the retirement fund of the correct tax rate for each member so the administrator can deduct the correct amount of tax. This is a called a ‘withholding tax process’ rather than having to apply for a tax directive, which would take more time.

4. Will the two-pot system apply to provident fund members over 55 years?

The new two-pot system changes will not automatically apply to provident fund members who were 55 years or older on 1 March 2021 – but they can choose if they want to join the two-pot system:

• •

If they do join the two-pot system, they will have the savings pot and retirement pot.

If they don’t join the two-pot system, the old rules will still apply to all their savings.

Remember: our My Money Matters toolkit has regular updates about the proposed two-pot system.

You can keep up with the developments here

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Alexander Forbes Retirement Fund newsletter

Meet Michael Avery – financial podcasts to empower Michael Avery is an experienced financial journalist and broadcaster.

Earlier this year he met six incredible young South Africans who worked their way up through the ranks of the Royal Cape Yacht Club Academy programme. This programme offers young South Africans from disadvantaged communities the chance to follow their dreams.

Their dream was to sail and win the 50th Anniversary Edition of the Cape 2 Rio Yacht Race. Their yacht, the Alexforbes ArchAngel, left Cape Town for Rio on 2 January 2023 sailing 3 300 nautical miles across the South Atlantic Ocean. They achieved a remarkable third place and the overall experience taught them valuable lessons.

Michael believes that if these six inspirational South Africans could conquer the Cape Flats and the Atlantic Ocean, then all of us can use determination

(to work hard) and discipline (to manage money wisely) to achieve financial freedom.

As a result, Michael Avery, along with key employees working at Alexforbes, created a series of financial podcasts to help listeners understand their finances and make more informed decisions. The podcasts cover topics such as establishing a budget, investing in your retirement savings, understanding debt and much more.

To listen to the podcasts and empower your financial future

Click here

Key takeaway: One of the podcasts – Start with the end in mind – reminds us that we need to first set goals to be able to achieve them. If your goal with these podcasts is to listen to one a week until you’ve listened to them all, you’ll need to commit to that goal and persevere when life gets in the way. This is the first step to starting your own journey to financial freedom.

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Our noticeboard Quick links: Complete the survey and

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The feedback we get from you helps us give you more of what you want to see in these newsletters.

Or, scan the QR code to complete the survey

Click here to complete the survey.

Meet our Alexforbes Rewards

anniversary winners Congratulations Roche Josling and Mamosa Mollo –

our winners of the trip to Sun City. Roche registered for Alexforbes Rewards and Mamosa downloaded five vouchers and now they are both planning a relaxing weekend away to recharge their batteries in style.

Remember that shopping with Alexforbes Rewards saves you money on everyday goods like groceries, healthcare products, data, airtime, travel deals and more. There’s no registration fee and the discounts and deals get updated regularly so you always have a good reason to log on and shop till you drop!

Log on here

Alexander Forbes Retirement Fund 0860 100 333 admin@alexforbes.com

Do you have any questions relating to the articles in this newsletter?

contactus@alexforbes.com (if there’s something you feel the fund can improve on)

You can contact the fund or

My Money Matters

My Money Matters using these contact details:

Website: https://mymoneymatters.alexforbes.com/

Alexander Forbes Retirement Fund newsletter

Step-by-step guide to downloading your benefit statement

Your statement made easy Your investment details Description

Vested

AF Connect is the enhanced version of AF Online. After looking into which features members used the most on AF Online, we used that information to develop and launch the enhanced AF Connect. It is easier to register and the features have evolved to give you more of what you want:

Non vested

1

2 You can take up to a third of your non-vested benefit in cash and use the balance

Total

2

R144 342.15

R0.00

R144 342.15

4

R4 579.23

R5 984.34

R10 563.57

5

R4 006.76

R5 236.34

R9 243.10

Opening Balance

3

Employer contributions Employee contributions Other transactions

6

R0.00

R0.00

R0.00

Expenses

7

R-2 940.81

R-3 833.05

R-6 773.86

Switches

8

R0.00

R0.00

R0.00

Investment return

9

Closing balance as at 30/09/2021

• • • • • •

1 Money you can take partly or entirely in cash when you retire.

Transaction summary for the period of 30/09/2020 to 30/09/2021

Portfolio summary as at 30/09/2021

R31 136.42

R316.53

R31 452.95

R181 123.75

R7 704.16

R188 827.91

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Investment portfolio

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Vested / Non vested Vested

AF Active Balanced High Growth

Non vested

AF Active Balanced High Growth Grand total

Expenses breakdown

Market Value R181 123.75 R7 704.16 R188 827.91

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Expenses

Recovered From Employer Contributions

Death benefit

R-3 565.19

Disability benefit

R-1 650.56 R-66.00

Funeral benefit

R-1 492.11

Administration fees

23013-2022-04 • Getty images

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Your retirement benefit as at 30 September 2021 is R188 827.91. Your benefit may be split into a vested and non-vested benefit. When you reach your normal retirement date, you will be entitled to your total fund credit. You may take part or your entire vested benefit in cash and from the non-vested benefit, you can take up to a third of your benefit in cash and use the balance when you retire to buy a pension. Where your non-vested benefit is less than the amount prescribed by SARS (currently R247 500), then your full non-vested benefit may be taken in cash.

when you retire to buy a pension.

3 The value of your retirement savings in the fund (fund credit) at the beginning of the reporting period.

4 The contributions that have been received by your employer and invested in the

period of the statement. The statements reflect gross contributions. Expenses are now shown separately. See your benefits fact sheet for details.

5 All your contributions invested in the period of the statement. The statements reflect gross contributions. Expenses are now shown separately.

See your benefits fact sheet for details.

6 This refers to transfer values, additional voluntary contributions, bulking

allocations, divorce orders, maintenance orders, called up loans and management committee expenses.

7 Expenses are made up of administration, reinsurance premiums, as well as, any

other adhoc fees or deductions. The breakdown of these expenses are reflected in the “Expenses breakdown”

8 Shows if you have changed portfolios at any time.

9 The actual rand change in your investment value over the reporting period can be positive or negative, depending on the performance of the markets.

10 The value of your retirement savings in the fund (fund credit) at the end of the reporting period.

11 The investment portfolios that your retirement savings are invested in.

12 A breakdown of your fund benefits and fund expenses.

If you pass away whilst in service of the employer, your dependants, beneficiaries or both will be entitled to a lump-sum benefit. The benefit is made up of your total fund credit, plus 3 times your annual pensionable or fund salary: R601 873.91.

Payment of the insured portion of the benefit needs approval from the insurer and will be taxed. Subject to free cover limits (if applicable).

If you withdraw , you will be entitled to your fund credit of R188 827.91. Any portion taken in cash may be taxed. Please talk to your financial adviser about your options.

Benefit statements

Disclaimer This document is a guide only to your benefits. If there are any conflicts between the information in this benefit statement and the official rules of the fund, the rules of the fund will always apply.

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Investment portfolios and balances Investment product details

Remember!

Personalised product and portfolio management

If you have already registered for AF Online, you use the same details to log into AF Connect.

You don’t need to re-register for AF Connect.

Claims summary and status Fund fact sheets

Step 1: Register for AF Connect

• • • •

Step 2: Download your benefit statement on AF Connect

Log in here Click on Register now Complete the registration page Important note: This may take a couple of days.

Step 1

Step 4

Log into AF Connect

Step 2

Click on the Individual tab and select Investment values

Step 3

The investment value screen will open.

Click on Statements

The Statements screen will open. Select the statement you’d like to view from the list

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Alexander Forbes Retirement Fund newsletter

Investment performance Your retirement savings are made up of: any previous savings you transfered from another retirement fund

your contributions and any contributions from your employer

Investment performance

One day you’ll use your retirement savings to buy a pension that gives you a regular income during retirement. The pension amount you’ll receive depends on how much you’ve saved before you retire, any investment growth on your savings and how much a pension costs at the time you convert your savings into a pension. Investing your money helps grow your retirement savings. You can make the most of your money by keeping your savings invested over long periods of time.

How safe are your retirement savings?

Retirement fund regulations require your savings to be diversified.

What does it mean if your savings are diversified?

It means your savings are invested in different types of investments and the amount in each investment is limited to protect your savings.

We don’t put all your eggs in one basket The portfolio invests in different types of investments with different investment managers.

Safer investment types

Riskier investment types

Lower chance of losing value over short periods, less chance of growing over longer periods, like cash

Higher chance of losing value over short periods, better chance of growing over longer periods, like shares and property

We expect riskier investments to grow your money better than safer investments over longer periods of time. This is why we don't put everything into safer investments.

It’s important to remember that investment values can go up or down over shorter periods. Over longer periods, we expect the value of investments to grow.

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Alexander Forbes Retirement Fund newsletter

Investment returns Performance of investment portfolio to 30 September 2023 Let’s take AF Balanced High Growth as an example The value of R100 invested over various periods to the end of September 2023

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1 AF Balanced High Growth Benchmark

We measure how well a portfolio is performing by comparing it to a benchmark1. We can see that the portfolio is better than its benchmark over all periods.

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R260 R236

R102 R103

3 months

Source: Alexforbes

Keep in mind that the value of your investments go up and down over short periods like three months.

1

R114

R143 R142

R153 R146

3 years

5 years

R114

1 year

5

10 years

3

Invest over long periods for your money to grow – the longer the better.

What is a benchmark? A ruler shows us objectively how long a piece of string is. In the same way,

we use a benchmark as a value to measure how an investment portfolio is performing and if it is delivering on its performance objectives.

Over a period of 10 years you would have R24 more for every R100 you saved in this investment portfolio instead of its benchmark.

Over long periods, we expect the value of investments to grow in line with its target, which may not be the case in shorter periods. For this reason, it’s better to focus on long periods like five or ten years when you look at retirement savings.

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Alexander Forbes Retirement Fund newsletter

AF High Growth

AF Passive Bold R243 R246

Growth portfolios

Benchmark

R145 R141

3 months

Income Target portfolios

R150 R146

1 year

R102 R102

3 years

5 years

10 years

3 months

1 year

3 years

AFRF Passive Houseview Income Target

Benchmark

Benchmark

R111

R111

R112 R111

R103 R104 R104 R104

1 year

Source: Alexander Forbes Investements

AF Retirement Navigator Benchmark

R102 R103

3 months

R109 R110

1 year

Click here to review all the portfolio returns.

3 months

R145

R144

R115 R115

AFRF Houseview Income Target

3 months

AF Retirement Navigator

R142 R142

R114 R115

R102 R101

Benchmark

1 year

5 years

25579-NL-Digital-2023-10 • Getty Images

Contact details Phone the Alexforbes Client Contact Centre on 0860 100 333 Monday to Friday between 08:30 and 17:30

While care has been taken to present correct information, Alexforbes and its directors, officers and employees take no responsibility for any actions taken based on this information, all of which require financial advice. Please speak to your financial adviser for tailored advice based on your individual

Send an email to: admin@alexforbes.com

financial needs.

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